Gold Price Forecast: XAU/USD remains on track to retest record highs at $2,075

Gold buyers take their time to recapture $2,075 – key hurdle.
Rising oil prices, stagflation fears keep gold price supported.
Pennant breakout on gold’s hourly chart points to further upside.

Dhwani Mehta FXStreet

Tuesday’s reports that Ukraine would no longer seek NATO membership, in a nod to Russia and the former confirming the first humanitarian corridor for evacuation eased the increasing worries over the Russia-Ukraine war. This triggered a fresh risk-on wave across the financial markets as well as a brief correction in oil prices. In reaction to this, gold price witnessed a sharp reversal from 19-month highs of $,2,071 and fell as lows as $2,021 before recovering to near $2,055 at the close. The US and the UK sanctions on Russian oil and gas imports helped keep a floor under gold price.

Despite the improvement in the market mood on the NATO/ Ukraine news, fears over stagflation on the relentless surge in oil prices and soaring global inflation continue to keep investors on the edge and the safe-haven demand for gold underpinned. Further, hotter-than-expected Chinese inflation data also helped gold price regain its shine this Wednesday. A retest of the record highs at $2,075 remains well on the cards, as the metal’s technical setup continues to paint a bullish picture in the near term. Therefore, in absence of top-tier US economic data, gold price will remain at the mercy of the Ukraine crisis-related updates and the chart-driven trading action.

Gold Price Chart - Technical outlook

Gold: Hourly chart

On the hourly sticks, gold price has charted a pennant breakout after bulls found a strong foothold above the falling trendline resistance at $2,044 earlier on.

The path of least resistance appears to the upside for gold buyers, as they look to retest 19-month highs reached a day before.

If the latter is taken out on a sustained basis, then the August 2020 high of $2,075 will be challenged. That level marks the lifetime highs for gold price.

The next bullish target is envisioned at $2,100, as bulls are likely to be unstoppable beyond the record high.

The Relative Strength Index (RSI) is trading flattish but comfortably above the midline, currently at 62.29, suggesting that there is enough room for bulls to flex their muscles.

Alternatively, if sellers regain control, then initial support is seen around the 21-Hourly Moving Average (HMA) around $2,037.

The additional declines will call for a test of the ascending 50-HMA at $2,010.

It’s worth mentioning that any pullback in gold price is likely to be seen as a good dip-buying opportunity.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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